Decision on Telstra’s Adam acquisition delayed

Telstra and the ACCC need more time to consider the issues raised by the regulator before Christmas.
Photo: Louie Douvis

by
John McDuling

Telstra’s proposed acquisition of Adam Internet has hit another stumbling block, with a ruling by the Australian Competition and Consumer Commission delayed indefinitely.

The competition regulator was scheduled to rule on Telstra’s takeover of the Adelaide-based ISP, believed to be worth $60 million, on February 7.

But in a statement published to its website during the Australia Day long weekend, the ACCC said the decision timeline had been suspended at the request of Telstra, with a new decision date to be announced “in due course".

Telstra said it and the ACCC needed more time to consider the issues raised by the regulator before Christmas.

“We will continue to engage with the ACCC and we’re confident we can work through any concerns in a timely manner," it said in a statement.

Telstra plans to use Adam as part of a “two brands strategy", akin to Qantas and Jetstar, to mitigate threats posed by low-cost rivals under the levelled playing field of the $37.4 billion national broadband network.

In December, the competition regulator appeared to set the bar for approval high when it warned that the transaction could “have the effect of substantially lessening competition in the markets for retail fixed voice services and retail fixed broadband services".

The regulator said Telstra could use the Adam brand to circumvent its structural separation obligations, which are designed to give competitors wholesale access to Telstra's copper network on the same terms as the telco giant’s retail arm as the NBN is rolled out.

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“Telstra would have the ability and incentive to utilise its market power to favour Adam over its wholesale customers in the provision of access to its network infrastructure," the regulator said in December.

Telstra’s fixed line competitors including iiNet, Macquarie Telecom and Vodafone Hutchison Australia have urged the ACCC to block the transaction.

Telstra has said that it would develop its own second brand if the transaction is blocked.